LDG Development LLC explores funding options for 240-unit project near Trinity Lane after halting plans to apply for HUD-program loan

Oct. 16, 2013

Written by

The Tennessean

A Kentucky-based multifamily developer has 13 acres off West Trinity Lane at Interstate 65 under contract with plans to build a 240-unit apartment community.

LDG Development LLC was working toward completing the purchase next month, but those plans have been delayed as the company explores funding options amid rising interest rates.

“Right now, we’re looking at various ways to make this deal happen,” said Michael Haas, development manager with LDG, which has halted plans to apply for a loan under a U.S. Department of Housing and Urban Development program and would still have to raise some equity to fund the project called The Paddock at Grandview.

The Paddock at Grandview would be the first apartments in Nashville for LDG, which has developed more than 4,000 units in nearly 30 communities nationwide. It would sit at the intersection of Brick Church Pike and Trinity Lane fronting Interstate 65.

Austin, Texas-based American Affordable Homes LP owns the site where the $30 million project is planned as part of a larger 25-acre tract. “We’ve had additional retail and commercial interest in the remaining parcels,” said Gene Watkins, vice president with American Affordable, citing a motel as an example. “All of those investments and activities are to be designed to create a positive gateway into that community.”

Haas said LDG considers expanding into Nashville a no-brainer considering the city’s dynamic, vibrant economy and strong demand for apartments. He cites proximity of the site to I-65 and downtown and a limited supply of units there among its appeals.

Most apartments near Trinity Lane were built more than 30 years ago and that area isn’t where developers have looked unless for tax credits, said Woody McLaughlin, an investor and owner of apartments in the Nashville area and member of the Greater Nashville Apartment Association. “There will be demand for a subsidized apartment over there, but I think it’ll be a hard sell for a market-rate (community),” he said.

Overall, 1,948 apartment units have been completed in the Nashville area so far this year, with another 7,831 units under construction through the end of September, McLaughlin said. He said there are others planned, but they haven’t started construction yet.

Fixed interest rates are up by about one percent since April. Although they have pulled back in recent months, the rising rates mean higher costs for borrowers, especially those seeking loans more sensitive to fluctuations in rates.

“Nearly a point or a little over a point in interest rate increases on a big loan can have a dramatic impact on a project,” Haas said.

Getahn Ward covers growth and development. He can be reached at 615-726-5968 or at gward@tennessean.com.